The project is scheduled to begin in October and open in December 2009.
The mill would produce steel structures for shipbuilding yards, including Vinashin's, to replace imported products for use in the domestic industry. Vinashin, formally known as Vietnam National Shipbuilding Corporation, will shoulder 51% of the funds and rely on Songsan for the remainder.
The still mill in the port city is the second steel project by the Songsan-Vinashin venture, which is building a US$35 million factory in the neighbouring Hai Duong province.
The steel mill is set to come on stream in the second quarter of 2008 and Vinashin wants 60% of its steel to be sourced locally by 2010. Currently, only 30-40% of the company's steel is produced locally.
Vinashin said it needs 40 trillion dong (US$2.5 billion) to reach US$1 billion in ship exports by 2010.
Formed last year and run by Vinashin's Shinec affiliate, the Shipbuilding Industrial Park (SIP) has attracted several major projects, including a joint venture between Vinashin and Finland's Mac Gregor group as well as a US$100 million project by the Swedish company IKEA.
The park will be home to a US$12 million car assembly factory, thanks to a joint venture between the German automaker Volkswagen and Shinec. A 15 hectare wharf able to receive freighters of up to 6,500 tonnes will also be built at the park as well as offices, a trade centre and a luxury apartment complex. The park offers many incentives, including low land rent rates for investors who sign land lease contracts before December 2007 as well as assistance for customers in workforce training and other fields.